UK stockborker Collins Stewart is to acquire interdealer broker Tullett for £212 million in a mixture of cash and shares.
Confirmation of the deal, the subject of five-months of wrangling and negotiations between the two parties, comes a day after Tullett agreed to sell its specialist voice and data network services subsidiary Gains International to GS Capital Partners 2000, a Goldman Sachs private equity fund and lead investor in dealing room outfit IPC, for up to £15.4 million. On completion of the sale Gains will continue to supply voice and data services to Tullett.
Joseph Gleberman, managing director of GS Capital Partners says the acquisition of Gains complements its existing investment in IPC. "These companies have complementary core competencies for servicing the mission critical environment of the trading floor," he says.
IPC says it has already reached an agreement with Gains International to co-market voice and data network services to financial institutions in the Americas and Europe.
The company adds that the transaction is structured so that IPC retains the option to purchase Gains International (US) Inc. and Gains International (Europe) Limited from GS Capital Partners in December 2003.
Tullett's decision to offload the business is part of its strategy of divesting non-core businesses ahead of its buy-out by Collins Stewart.
Commenting on the merger, Bruce Collins, chief executive of Tullett, says the deal will enable the firm to release value to shareholders and participate in the consolidating global interdealer broker marketplace.
The capital available to the combined group will be used to grow Tullett's electronic broking operations, he says. The two companies also expect to leverage a shared infrastructure, technologies, and clients.